What Happened?
A number of stocks jumped in the afternoon session after markets rotated out of tech names to position themselves for a massive injection of government spending.
The sector was ignited by President Trump's call for a $1.5 trillion defense budget for 2027, a significant increase that sent defense contractors surging. Northrop Grumman jumped over 10% and Lockheed Martin gained nearly 8%, acting as the primary engine for the sector's outperformance. Beyond the immediate defense rally, the industrial sector benefited from a broader stabilization in energy costs, with crude prices rebounding. This combination of policy-driven demand and stabilizing input costs made heavy industry an attractive destination.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Gas and Liquid Handling company Gorman-Rupp (NYSE: GRC) jumped 4.2%. Is now the time to buy Gorman-Rupp? Access our full analysis report here, it’s free.
- Engineered Components and Systems company Timken (NYSE: TKR) jumped 3.2%. Is now the time to buy Timken? Access our full analysis report here, it’s free.
- Water Infrastructure company Tennant (NYSE: TNC) jumped 4.2%. Is now the time to buy Tennant? Access our full analysis report here, it’s free.
- Engineered Components and Systems company Enpro (NYSE: NPO) jumped 3.2%. Is now the time to buy Enpro? Access our full analysis report here, it’s free.
- Water Infrastructure company Mueller Water Products (NYSE: MWA) jumped 3.5%. Is now the time to buy Mueller Water Products? Access our full analysis report here, it’s free.
Zooming In On Gorman-Rupp (GRC)
Gorman-Rupp’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 7.6% on the news that the company reported record second-quarter financial results that surpassed analyst expectations, driven by strong sales linked to infrastructure spending.
The industrial pump manufacturer posted earnings of $0.60 per share on a record $179 million in revenue, surpassing analyst expectations. This performance marked a significant improvement compared to the $0.32 per share reported in the same quarter last year. The revenue growth was primarily fueled by a $3.5 million increase in sales to the municipal market, which the company attributed to infrastructure investment. The fire suppression, industrial, and petroleum markets also contributed to the gains. In a further sign of strength, Gorman-Rupp announced record incoming orders of $188 million, up 15.7% from the prior year, which suggested a positive outlook for the second half of the year.
Gorman-Rupp is up 5.8% since the beginning of the year, and at $50.94 per share, has set a new 52-week high. Investors who bought $1,000 worth of Gorman-Rupp’s shares 5 years ago would now be looking at an investment worth $1,507.
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